Hedge Fund Industry Weighs In on the Presidential Election/ Outlook for Dodd-Frank

08/19/2017

August, 2015 – In the wake of what is already shaping up to be an extremely contentious race for the presidency, The New York Hedge Fund Roundtable’s members believe it will come down to a race between Hillary Clinton and Jeb Bush, with the outcome of the election determining the future of Dodd-Frank. If Republicans gain a majority control, expectations are that Dodd-Frank and the myriad of regulations introduced since 2008 would be weakened. Similarly, if Wall Street makes a significant contribution to the winning candidate, regulations could be eased –regardless of which party has majority control.

“Given the stakes for the Street, and the hedge fund industry in particular, it would be nearly impossible to overstate the importance of this presidential race,” said Timothy P. Selby, President of the New York Hedge Fund Roundtable. “With the political race already drawing substantial media attention and potential candidates doing everything in their power to gain the support of the public at large, regulation of the hedge fund industry is a topic that will likely receive significant attention throughout the campaign period.”

Members of the Roundtable were surveyed about their opinions on the presidential election and what it will mean for the regulatory environment through a recent electronic poll.

Following are some of the key findings of that survey:

When asked who they would vote for in a primary, the responses of registered Republicans who responded to the survey (54% of respondents) broke down in the following way: 46.1% chose Jeb Bush; 23% chose Donald Trump; 7.7% chose Marco Rubio; 7.8% chose Scott Walker; 7.7% chose Rick Perry and 7.7% chose John Kasich.

Asked who they would vote for in a primary, the responses of registered Democrats who responded to the survey (46% of respondents) broke down in the following way: 83.3% chose Hillary Clinton and 16.7% chose Bernie Sanders.

Asked whether they believe any of the candidates actually have the ability to weaken Dodd-Frank or any of the regulations that have been introduced since 2008, 42.9% of respondents said they believe that if the Republicans gain a majority control there is a very real possibility these regulations would be eased; 29% believe that if the Street pushes hard enough and makes a big enough financial donation to the leading candidates, there is a real possibility regulations could be eased; and 28.1% said they think that regardless of which party ultimately prevails, the public backlash would be too great for any politicians to ease regulations.

50% of respondents to the survey indicated that they believe it is still too early to know how the election will play out; 44.1% of respondents said they believe it will be a hotly contested election with ongoing contention between the two political parties throughout the campaign; and 5.9% think it will be a straightforward election that will be accurately called early on by pundits.

When asked how big a role they believe Wall Street, particularly hedge funds, will play in the 2016 election, 47.1% of respondents said that donations from the Street are such a large part of political fundraising that it would be impossible for candidates to ignore this sector; 29.4% think Wall Street and hedge funds will have no greater impact on the election than the general public; 12% think the candidates that promise the most favorable treatment to high net worth individuals will land the bulk of funding; and 11.5% think that the public’s unhappiness with the increasing gap between the uber-wealthy and the lower classes will force candidates who want to appeal to the masses to take a tougher stance on regulating the Street and the hedge fund industry.

If the market were to crash before the election and another Occupy Wall Street were to result, 44.1% of respondents believe that all candidates, regardless of affiliation, would turn against the Street and demand even stronger regulations; 38.3% think hedge funds would again become major scapegoats, resulting in even greater regulation of the hedge fund industry; and 17.6% believe that any impact would be negligible.

If predictions that the economy is currently within an unsustainable, artificially inflated bubble are true, and if that bubble were to burst before the election, 76.5% of respondents believe Obama would be blamed and any Democratic candidate would be guilty by association; 17.6% believe it would negatively impact any Republican candidate; and 5.9% think it would have no impact on the race.

*Of the respondents to this survey, 27% were fund managers; 44% were service providers; 3% were risk management or trading; 3% were allocators; and 23% were “other.”

July’s “bonus” question: When asked if they suddenly found themselves forced to participate in a real-life Hunger Game and forced to compete against their closest friends (only one person can be left at the end), 53.1% of respondents indicated that their survival skills are second to none and that they would fight to win and miss their friends dearly; 21.9% said they would partner with their closest friend to help position that person for victory and then gracefully sacrifice themselves; 15.6% said that since they work on Wall Street they rarely find time to exercise and would be the first eliminated; and 9.4% said they would take the earning from their well-managed investment portfolio and hire themselves a black ops specialist to eliminate the competition for them.

About The New York Hedge Fund Roundtable:

The New York Hedge Fund Roundtable is a non-profit organization focused on promoting ethics and best practices within the alternative investment industry. The membership consists of investors, fund managers and other industry professionals who regularly meet to discuss current issues within the industry and connect with peers. Monthly events center around thought-provoking speakers and panels designed to keep members apprised of timely and important issues within the alternative investment industry. The Roundtable’s goal is to provide a forum for thought leadership, where industry professional have the opportunity to enhance their knowledge and skills and to network with other individuals committed to advancing the industry with the highest ethical standards. For additional information about the Roundtable, visit: http://www.nyhfr.org